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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen with

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Speaker 1: David Gura. Daily we bring you insight from the best

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Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance

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Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,

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Speaker 1: on the Bloomberg Domini constant Here with us in our

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Speaker 1: Bloomberg eleven three studios. He's the global head of rates

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Speaker 1: research at Deutsche Bank Securities. Let's start by just previewing

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Speaker 1: what you expect to see tomorrow. Gonna get some new

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Speaker 1: data on inflation here in the US, so much of

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Speaker 1: the conversation centering on inflation expectations where inflation stands. What

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Speaker 1: are you looking for tomorrow when those new data come out? Um, well,

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Speaker 1: I mean the views of the official view is pretty

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Speaker 1: much consensus. Uh, sort of slightly better inflation days than

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Speaker 1: we've seen. I guess in my heart of hearts, I'm

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Speaker 1: sort of concerned that we're going to see perhaps some

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Speaker 1: broadening of the weakness. There's means some focus on the

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Speaker 1: service sector inflation being a weak relative to the good

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Speaker 1: side inflation, and that's in some sense more important because

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Speaker 1: services are much less volatile than good. So if you

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Speaker 1: get some sort of weakness there, you're going to be

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Speaker 1: wired about a more persistent downdraft inflation going forward. And

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Speaker 1: behind the sort of month to month data, we have

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Speaker 1: this sort of underlying concern that inflation is just generally

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Speaker 1: going to be sort of drifting lower or closer to

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Speaker 1: one percent than the Fed two percent targets. And that's

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Speaker 1: our kind of new inflation equilibrium concept that we've been

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Speaker 1: focused on. Tom, How do you process the divide within

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Speaker 1: the federals on this issue? And in particularly have the

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Speaker 1: Fed cheers saying this is transitory, these headwinds or transitory.

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Speaker 1: We heard from Jim Bowler of the St. Louis Fed

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Speaker 1: yesterday saying he's not optimistic we're going to see any

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Speaker 1: market rise in inflation anytime soon. How problematic is that

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Speaker 1: divide among policy makers? Well? I think that the central

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Speaker 1: banks of a real problem because you know, in general,

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Speaker 1: and it's not just the FED, they've all struggled to

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Speaker 1: meet inflation targets. H And the importance of the inflation

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Speaker 1: target for any central bank is that it obviously gives

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Speaker 1: them the anchors, you know, kind of what they do. Uh,

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Speaker 1: And it's because inflation is generally considered to be driven

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Speaker 1: by the expectations of inflation. If you have a target

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Speaker 1: that's supposed to be driving expectations and you don't meet

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Speaker 1: that target, then you have to It begs the question

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Speaker 1: what does create inflation? H And that's the kind of

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Speaker 1: idea whereby if inflation is being created by some other process,

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Speaker 1: and it could be structural, that could be do with technology,

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Speaker 1: it could be to do with demographics and all these

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Speaker 1: other sort of structural things that is really outside the

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Speaker 1: remit of a central bank, and then it almost becomes

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Speaker 1: redundancy what their inflation target is, and it may be

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Speaker 1: challenges their whole kind of policy framework. And I think

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Speaker 1: that's the that's why the the FED has to in

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Speaker 1: any center brank has to still say things are transitory.

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Speaker 1: Inflation will go up, won't it, Because otherwise otherwise what

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Speaker 1: are they doing? Well? Here in I guess the two

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Speaker 1: thousan seventeen what's the the utility of the use of

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Speaker 1: the Phillips curve at this point? How do you regard

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Speaker 1: that tool? Well, we know empirically it's been a disaster.

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Speaker 1: So if you look at five year rolling regressions of

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Speaker 1: the wage inflation versus unemployment gaps unemployment rates. Obviously, empirically

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Speaker 1: it's broken down, it's flattened and as shifted lower, which

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Speaker 1: means that the average wage inflation rates for some sort

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Speaker 1: of unemployment technliberum is much lower, and the sensitivity of

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Speaker 1: wages to change his unemployment is much lower. So empirically

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Speaker 1: it's become a problem. I think that there is a camp, obviously,

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Speaker 1: and it's a consensus camp. There's just a matter of time.

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Speaker 1: We have to be patient. This is the natural consequence

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Speaker 1: of a major financial crisis and economic downturn. It's all

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Speaker 1: going to come good, and I think that's the sort

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Speaker 1: of consensus within the FED. My concern is that there

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Speaker 1: are reasons for why we've noticed this this collapse in

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Speaker 1: the Philips curve, and they are not to do necessarily

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Speaker 1: with cyclical forces. Are to do with these structural forces

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Speaker 1: such as demographics. For example, the older people, the fifty

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Speaker 1: five year old plus generation, they've seen the biggest shift

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Speaker 1: in Phillips curve relatians is some of the younger generations.

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Speaker 1: And because though that that that that group of that

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Speaker 1: age cohort is becoming more and more dominant in the

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Speaker 1: labor force. I don't think this thing is necessary going

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Speaker 1: to change over the next five years or so. We're

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Speaker 1: waxing single equation this morning with the Philips because so

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Speaker 1: we said, good morning, David Gerin, Tom Key, Bloomberg Surveillance Dominique.

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Speaker 1: One of the ideas here is a Phillips curve, a

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Speaker 1: single equation solution. What a conceit? Come on? This thing

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Speaker 1: comes out of Lse forty years ago. I get it.

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Speaker 1: And there's been adjustments by guys a lot smarter than me.

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Speaker 1: But please tell our audience wire supposed to hinge where

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Speaker 1: we're going on. Frankly, a rather simplistic algebraic function. Well

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Speaker 1: I can. I couldn't agree more. And and it's sort

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Speaker 1: of incredibly sort of backward looking in some sense as well.

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Speaker 1: Um so, no, I I think it's a there's a

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Speaker 1: it's a it's good it's a good thing that sort

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Speaker 1: of isn't working because it makes you think about you

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Speaker 1: know what exactly, and I mean Bob Schuller's world folds

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Speaker 1: over under this, and that there's not only a behavioral

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Speaker 1: construct that you overlay on a simple algebraic function, but

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Speaker 1: at the heart all of these equations are based on

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Speaker 1: some forms of Gaussian Bell curve distributions. It's I think

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Speaker 1: we learned in the last ten years. It's not a

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Speaker 1: Bell curve world, right, Yes, And I think I guess

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Speaker 1: if you're going to defend anything, I suppose what you

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Speaker 1: do as you say that at least when things break down,

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Speaker 1: you still understand why you've been so wrong for so

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Speaker 1: long sort of thing. And I think that's going to

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Speaker 1: be the case with some of the central banks. I'll realize,

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Speaker 1: you know, they'll understand what they got wrong based Is

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Speaker 1: it just because they don't have a new theory to

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Speaker 1: go to. I mean, that's a that's a very valid

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Speaker 1: thing to ponder here, and I mean, really good papers

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Speaker 1: is summer Frankly, I mean they're driving in the dark

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Speaker 1: to some extent, and uh yeah, I mean it's been

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Speaker 1: partly because we're in this world of let's say, creative

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Speaker 1: destruction and huge structural upheavals, whether it's globalization, technology or

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Speaker 1: the aging populations. All of these things things and make

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Speaker 1: it very hard I think for anyone to have a

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Speaker 1: lot of confidence in the in the future. I mean,

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Speaker 1: David gurd did, do people understand that four months of

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Speaker 1: the year, it's like we live in Greenland. You drive

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Speaker 1: to work in the dark, and you come, you go

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Speaker 1: home from blue exactly treasure these few several months, there's

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Speaker 1: no there's no sund surveillance. I'd love you ask you

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Speaker 1: that you explained that there could be a linking between

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Speaker 1: low inflation high growth via what we're seeing inequity. Just

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Speaker 1: spell that out for you, so if you want, well,

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Speaker 1: I recall very well the late nineties early two thousand's

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Speaker 1: where we saw strong growth and low inflation, and obviously

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Speaker 1: it was associated with a real investment boom. It was

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Speaker 1: to do with the dot com bubble at the time, etcetera.

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Speaker 1: UH and extray markets were doing very well. And there's

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Speaker 1: this concept of Tobin's Q, which is basically the market

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Speaker 1: value of ecuties versus replacement costs, which is investment, which

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Speaker 1: is the investment side of it. So companies basically started

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Speaker 1: issuing a lot of equity instead of buying back their stock.

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Speaker 1: And and I know we know that the capital laborat

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Speaker 1: show the amount of investment relative to employment in the

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Speaker 1: US in particular is very very low. Now, so there

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Speaker 1: is this sort of case for saying we want to

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Speaker 1: see much higher real investment relative to employment and that

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Speaker 1: would raise productivity. And so clearly one way to do

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Speaker 1: that would be to have companies stop buying back their

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Speaker 1: stock uh and invest and UH the actual market going

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Speaker 1: up another sort of thirty percent would be equivalent to

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Speaker 1: a kind of what happened in the late nineties. And

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Speaker 1: so rather than being worried about equity bubbles and the

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Speaker 1: idea that you know, interest rates are going to go

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Speaker 1: up and and and that that the actually market may

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Speaker 1: have to come down, so that as part of that,

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Speaker 1: just maybe the outlook is to say interest rate is

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Speaker 1: going to stay very low because inflation is going to

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Speaker 1: stay very low, and interest rates will only rise when

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Speaker 1: real growth is a lot stronger. But in a way

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Speaker 1: that has to come after equities go up. What is

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Speaker 1: what is that We're going to come back with you,

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Speaker 1: but very quickly here what is the catalyst to jump

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Speaker 1: start real growth besides the hope and a prayer from

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Speaker 1: smart guys like you. Well, I mean, I think we've

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Speaker 1: had a lot of buybacks in the extray markets. Sort

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Speaker 1: of we know that there's been a lot of buybacks.

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Speaker 1: There's a sense whereby that's maybe shifting towards more m

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Speaker 1: and A activity and in the grand cycle of things.

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Speaker 1: Is possible that we could shift to greater net equity

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Speaker 1: issuance at some point once valuations in the epting markets

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Speaker 1: encourage companies to sort of think about replicating themselves rather

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Speaker 1: than buying someone else. So the cast lists would have

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Speaker 1: to come from, you know, from the financial markets to

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Speaker 1: some extent, and without doubt, a strong ectually market I

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Speaker 1: I think would encourage real investments and that would raise productivity.

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Speaker 1: You would be adding capital to labor right now. The

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Speaker 1: capital laboration shows growing is pathetic. It's growing around for

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Speaker 1: three or four percent if you're lucky. It used to be.

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Speaker 1: It's been as high as eight percent, and on average

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Speaker 1: it should be six percent. I find it interesting that

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Speaker 1: the President of the United States is retweeting a Bloomberg

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Speaker 1: Markets church. I saw that. I haven't brought it up.

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Speaker 1: I did see that. Yeah, Mr Trump, if you're listening

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Speaker 1: out on the golf course in the early morning sun,

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Speaker 1: all I can say is our team led by when M.

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Speaker 1: Bloomberg would love to visit you and move a terminal

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Speaker 1: out to your many bed men stars today he does

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Speaker 1: he understand he could have a Bloomberg log in and

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Speaker 1: have a terminal in bedstory in Florida. He could have

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Speaker 1: one at the White House when he's there. Can he

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Speaker 1: have one on the golf course? I think he can

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Speaker 1: use the professional app Very good, continue to continue to

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Speaker 1: hawk this product. That was a word by our sponsors, folks,

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Speaker 1: But we thank the President seriously for retreating show Chandra's

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Speaker 1: great work at Bloomberg Markets dominy constant with us. He

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Speaker 1: knows about the Bloomberg terminal dominic. One of the great

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Speaker 1: minds of investment was Phil Currey, enjoying a life well

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Speaker 1: into his hundredth year, a great student of solar eclipses.

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Speaker 1: As we have the clips coming up in August, and

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Speaker 1: Phil kay always talked about the bright lights of inflation

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Speaker 1: under the constant theme there aren't any bright lights. How

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Speaker 1: in the dark, How in the shade are we going

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Speaker 1: to be with a lack of inflation? Well, um, I

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Speaker 1: think it ultimately comes down to how low nominal growth

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Speaker 1: is because of the lack of inflation. So this is

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Speaker 1: why if we can, if we can make something out

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Speaker 1: of low inflation in terms of higher real growth, it

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Speaker 1: won't be so dark. So that's the kind of key

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Speaker 1: issue I think initially though, if inflation is going to

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Speaker 1: stay somewhat disappointing. UH, and we're not going to get

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Speaker 1: a big rebound or see the data obviously on the

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Speaker 1: PPI front today and UH and CPI tomorrow. But if

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Speaker 1: initially we don't get any sort of meaningful bounce back inflation,

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Speaker 1: then obviously it's going to look a little bit dark

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Speaker 1: because people are going to question what the FED is

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Speaker 1: actually doing. You know, obviously they're they're on on course

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Speaker 1: to do their balance sheet reduction, and they're talking about

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Speaker 1: hiking possibly in December, and all that's going to look

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Speaker 1: a bit sort of you know, what's the point of it? Okay,

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Speaker 1: So within your research, note, I don't think there's a

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Speaker 1: fiscal response. Well, all the infrastructure is the other father role?

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Speaker 1: Is that? I mean my yeah, I mean my view

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Speaker 1: on fiscal is to distinguish the sort of the two

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Speaker 1: kinds of fiscal One is obviously fiscal stimulus, and stimulus

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Speaker 1: is fine if in some sense you can sort of

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Speaker 1: unleash some sort of multiply effect. But there's always a

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Speaker 1: danger that the FED kind of responds to that by saying, okay,

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Speaker 1: because of our models on unemployments and we think that

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Speaker 1: Phillips curve is gonna work. We're gonna just you know,

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Speaker 1: snuff out the extra stimulus by a raising rates a

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Speaker 1: bit faster. So it could be a sort of a

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Speaker 1: zero some game if the FED kind of offsets the

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Speaker 1: fiscal fiscal reform though, is that actually kind of raises

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Speaker 1: potential growth is much more interesting because and obviously you

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Speaker 1: can sort of shift out your supply curve effectively. Uh

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Speaker 1: and um, what's the scope for that? Well, it doesn't

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Speaker 1: look so good now because they've obviously dropped some of

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Speaker 1: these are more outrageous type policies that what some people

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Speaker 1: thought were outrages, such as the border attacks. Uh. And

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Speaker 1: but those could have had a more meaningful impact I

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Speaker 1: think on potential growth. And David part of the debate

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Speaker 1: here as you've got to move the needle. I mean,

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Speaker 1: in the seventeen nineteen frillion dollar economy, it takes a

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Speaker 1: lot of fiscal part really to move the needle. You

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Speaker 1: declare volatility dead, and I'm sure there are many investors

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Speaker 1: grieving that. How do we move past that? What what

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Speaker 1: do you what do you see as the wavefward when

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Speaker 1: it comes to this this low volatility environment, Well, it

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Speaker 1: doesn't he doesn't do the hedge fund again. Yeah right,

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Speaker 1: I mean that that. I mean that invol's dead, I

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Speaker 1: think for a couple of reasons, or has been dead

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Speaker 1: for a couple of reasons. One is, obviously interest rates

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Speaker 1: are very low, and when interest rates are very low

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Speaker 1: in general volacities, he's going to be pretty low in

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Speaker 1: the rate market, and that's sort of, um, you know,

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Speaker 1: maybe infects some of these other assetment class as well,

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Speaker 1: because's not just rate vol that's obviously very low. Um.

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Speaker 1: The other reason, though, obviously, is the central banks are

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Speaker 1: such big players and the financial markets through countit of easing.

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Speaker 1: So even though the FED no longer is doing quey

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Speaker 1: and it's going to start winding down the balance sheet

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Speaker 1: very slowly, uh, the CB and BOJ are still massive

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Speaker 1: buyers of securities and that see other sort of reason

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Speaker 1: than affects it. So I think the way in which

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Speaker 1: you eventually get out of it will be some combination

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Speaker 1: of raising nominal growth and as we said, it's not

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Speaker 1: likely to come from inflation very much. It'd have to

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Speaker 1: be a real growth story eventually, but also getting the

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Speaker 1: central banks sort of out of the financial markets, and

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Speaker 1: the ECB is probably gonna taper again later, we'll announce

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Speaker 1: the tapering later this year, perhaps as early September. And

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Speaker 1: obviously fed's doing their thing on balance sheet and the

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Speaker 1: b J is going to be a long way behind.

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Speaker 1: But then eventually they may do something. So if all

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Speaker 1: goes well, you know, slowly, slowly, slowly, maybe we can

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Speaker 1: bring back higher, higher rates on the real side and somethng.

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Speaker 1: You have been more than generous, as I say, folks,

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Speaker 1: the problem with Domini because you have to read as

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Speaker 1: length theory, search past word by word. Sure we protect

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Speaker 1: the carpyright. I've already had a couple of emails. No,

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Speaker 1: we're not going to mail out Deutscha Bank's work. Please

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Speaker 1: contact Deutsche Bank for doctor customs. Brilliant, uh, David, I

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Speaker 1: guess we should wax politically here. That seems to be

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Speaker 1: the season with a qualified candidate, the former governor of Oklahoma.

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Speaker 1: Oklahoma's outside of the three zip codes we work within, David,

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Speaker 1: it's the rest of America. We second morning to our

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Speaker 1: listeners there on serious ex im one nineteen. If Frank

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Speaker 1: Keating joins us now, as you say, former governor of

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Speaker 1: Oklahoma with a long history with the FBI as well.

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Speaker 1: He governor Keating. Great to have you on the program

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Speaker 1: once again got us up to speed on what you're

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Speaker 1: watching here as all of these investigations unfold. Given your background,

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Speaker 1: what's most interesting to you? Where do you see the

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Speaker 1: most interest when it comes into the Russia investigations. Well, I,

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Speaker 1: of course, as a citizen, UM was not surprised, but

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Speaker 1: certainly as a result of my background that the Russians

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Speaker 1: and others have been interested in American politics and American elections.

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Speaker 1: Have they been, um doing everything in their power to

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Speaker 1: disrupt them or to change the outcome? Well, I suppose

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Speaker 1: they would try if they could, But de Nited States

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Speaker 1: does the same thing. They are we are very interested

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Speaker 1: in what's going on in countries that are our adversaries,

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Speaker 1: and I'm sure and I know that in the past

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Speaker 1: there have been efforts made to change outcomes of elections.

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Speaker 1: But that said, UM, I'm not friendly to the concept

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Speaker 1: of an independent council, a special prosecutor special council, because

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Speaker 1: if you have one victim and you have an armory

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Speaker 1: of investigators, have an army of prosecutors, you're going to

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Speaker 1: get your victim, whether it's spending on the sidewalk or

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Speaker 1: whether in for example, the Trump case, UM it's a

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Speaker 1: deduction that wasn't warranted, or you in a limited um

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Speaker 1: partnership value a property greater than its real value was,

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Speaker 1: and all that's of course arguable, but that's what worries me.

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Speaker 1: The Independent Council himself, Bob Mueller, I think is a

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Speaker 1: very fine person, very sharp person. But again it's the

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Speaker 1: concept itself and where it goes with anybody's guests. But

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Speaker 1: I would imagine they'll find something, and I think that's

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Speaker 1: terribly destructive to a free society. How does somebody like

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Speaker 1: Mr Mueller, the agents who are working these investigations, how

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Speaker 1: do they tune out the political noise surrounding all of this.

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Speaker 1: We've seen some criticism direct and indirect of Mr Mueller,

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Speaker 1: for instance, uh speculation that he might be be removed, etcetera.

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Speaker 1: When you're working investigation like this amid all of these

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Speaker 1: political pressures, how do you tune that out? Well? I

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Speaker 1: was U S attorney in in my state, and I

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Speaker 1: share the U S attorneys. I was number three at

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Speaker 1: the Justice Department and supervised versually all of the federal

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Speaker 1: enters and establishment at Treasury and in Justice. We had

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Speaker 1: pretty strong rules that we didn't get engaged in politics

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Speaker 1: unless there was a real issue, I mean, a very

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Speaker 1: very dangerous um challenge to legal, challenge to the process itself.

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Speaker 1: I remember one time, as a young agent in San Francisco,

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Speaker 1: I interviewed Mayor Alito, who then was under an investigation.

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Speaker 1: I don't recall at this juncture what poor And he said, well,

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Speaker 1: you're just here because of Richard Nixon told you to

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Speaker 1: come here. But they average fbigent. You know, he has

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Speaker 1: cases open, he's assigned to lead, he interviews people. He

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Speaker 1: is totally a political and he is you know, totally

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Speaker 1: professional at least that has been my experience. So where

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Speaker 1: this goes is anybody's yes. But as I said, I

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Speaker 1: just hope that it's not another kem Star. We moved

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Speaker 1: from white Water to the staining dress and the President

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Speaker 1: rying about having it's We're going to turn things in

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Speaker 1: your head. That's what we do. In August, here David gurin,

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Speaker 1: Tom Keene with us, the governor of Oklahoma, the former governor,

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Speaker 1: Frank Keating, of course, with his public service with the

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Speaker 1: Federal Bureau of Investigation, talking here about Mr Mueller earlier

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Speaker 1: in that Frank, let's talk Anna Langthorne. She's head of

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Speaker 1: the Oklahoma Democrats. John Sparks a Senate leader, Scott Inman

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Speaker 1: the House leader. The Democrats owned the state from nineteen

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Speaker 1: o seven to nine, when the Commies known as the Republicans,

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Speaker 1: took over the state. What do the Democrats need to

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Speaker 1: do to get that traditional Democratic voice back? Many would

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Speaker 1: suggest that the Secretary of State lost the election rather

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Speaker 1: than Mr Trump won it. Do you have any worry

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Speaker 1: that the Democrats actually get their message organized and they

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Speaker 1: take back Michigan or they could even take back Oklahoma. Well,

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Speaker 1: you know, Tom, it is uh anybody's guess right now,

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Speaker 1: because I was the first Republican governor of my state

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Speaker 1: since the sixties, the Democrats in control of the House

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Speaker 1: and Senate forever. And my whole theme was why are

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Speaker 1: we for capita income? There's no reason for this. When

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Speaker 1: I left office, oil was never above eighteen dollars of barrow.

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Speaker 1: We were concurty seven and per capita income. We put

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Speaker 1: right to work in the constitution. Today, the highway system,

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Speaker 1: the turnpikes, made the kids take carter course in school,

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Speaker 1: you know, charter choice. All that stuff. Got rid of

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Speaker 1: welfare through a Democrat House and Senate. It can be done.

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Speaker 1: But what's important is to have Republicans realized. To be

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Speaker 1: the party of Lincoln, they have to win Lincoln agendas,

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Speaker 1: and the Democrats to be a party of Jefferson, they

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Speaker 1: have to win Jefferson agendas. But both of them are

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Speaker 1: American agendas. Come together, let's work it out and do

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Speaker 1: what's necessary to make America great again. As the President says,

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Speaker 1: So it's not that difficult. It doesn't really take a

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Speaker 1: a PhD in economics to figure out what America? What

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Speaker 1: ails America? And this tax thing, I think is going

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Speaker 1: to be watched very carefully with all those trillions abroad,

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Speaker 1: and we're gonna fix the system and bring that money home.

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Speaker 1: We'll see. But it does take leadership, and it has

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Speaker 1: it takes humility to get stuff done. You can't like it,

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Speaker 1: you just can't take the view con that it's my

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Speaker 1: way or the highway. Where's that humility? Where's that leadership

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Speaker 1: going to come from? As you mentioned, we're all watching

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Speaker 1: what's what's happening We're going to happen in Washington when

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Speaker 1: it comes to tax reform. Where do you do you

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Speaker 1: see a real leadership in humility? Deficit in Washington and

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Speaker 1: what's going to fill that Well, obviously Donald Trump, there's

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Speaker 1: not a whole lot of humility there. But he wants

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Speaker 1: to win. He wants to be a successful president. I

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Speaker 1: know the vice president feels the same way. Think of

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Speaker 1: the good men and women who are willing to serve

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Speaker 1: in the administration. They don't want to leave a wreckage

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Speaker 1: of a legacy. I mean, they want to win. They

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Speaker 1: want to succeed as well. And I really think the Democrats.

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Speaker 1: My grandfather was a bank owner in Illinois, but he

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Speaker 1: was a Democrat member of Congress. Your father, my granddad was,

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Speaker 1: but he I mean he really thought deep these issues

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Speaker 1: and he wanted um during he was a member during

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Speaker 1: the depression. He wanted to make sure that small towns

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Speaker 1: and community banks were listened to and looked at during

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Speaker 1: the course of the recovery from the from the depression.

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Speaker 1: And you know, but it does take, you know, the

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Speaker 1: president's leadership, and he needs to send up ahead of

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Speaker 1: the table, bring people from both sides in and say, look,

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Speaker 1: here's how I see we ought to go. What do

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Speaker 1: you think can we count on you to help us?

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Speaker 1: And you look at the Democrats, how do you hike

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Speaker 1: camp for North Dakota's um Joe mansion from West Virginia.

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Speaker 1: Those are conservative people. There are Democrats that are up

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Speaker 1: for reelection from states that the President won. Those individuals

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Speaker 1: are talkable. I mean, they're not completely fanatical for the

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Speaker 1: Democratic Party. They are fanatical to be reelected, and I

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Speaker 1: think there's an opportunity here to address their concerns and

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Speaker 1: address thecerns of concerns of the country and solve these problems.

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Speaker 1: I just I'm puzzled, as a former executive of the state,

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Speaker 1: why this is so difficult. I just don't understand. How

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Speaker 1: far does does that distance between Oklahoma City and Washington

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Speaker 1: Field today? But does it does it feel farther than

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Speaker 1: it has? Well, it's interesting when our members come home,

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Speaker 1: and they're all good people. When they come home, they're

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Speaker 1: convinced that things are going to get fixed and things

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Speaker 1: are gonna move forward. But they, as I I'm sure David,

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Speaker 1: you and Tom as well, aren't sure what kind of

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Speaker 1: leadership the president is going to provide. Because he is analyst,

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Speaker 1: this is not his area of expertise, but he wants

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Speaker 1: to win. So what's important is for the vice president

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Speaker 1: to take a much more private role with the President,

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Speaker 1: and hopefully this lunch today will help in that direction

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Speaker 1: where the VP says, you know, we're all going to

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Speaker 1: look like fools so we don't get stuff done, and

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Speaker 1: here's what I suggest we do, and hopefully they'll do that.

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Speaker 1: A great point to David's wonderful question. I got the

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Speaker 1: map out here, folks, and you know I've driven some

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Speaker 1: of this. I've had the privilege I had parents, Frank,

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Speaker 1: who just put you in the car and said let's go.

428
00:22:57,400 --> 00:23:00,320
Speaker 1: And there's no air conditioning. You know you I'm out

429
00:23:00,320 --> 00:23:02,560
Speaker 1: of Oklahoma, and I mean, I know you take the

430
00:23:02,640 --> 00:23:05,600
Speaker 1: Keating family Gulf Stream, but the answers you to go.

431
00:23:06,520 --> 00:23:09,200
Speaker 1: You go south and drive through Nashville, or you go

432
00:23:09,400 --> 00:23:13,240
Speaker 1: north and drive through Mike Michael Pence Indianapolis. I mean,

433
00:23:13,280 --> 00:23:17,440
Speaker 1: there's there's two arcs to drive from Oklahoma to Washington.

434
00:23:18,240 --> 00:23:21,280
Speaker 1: What does that group of Republicans say about this president?

435
00:23:21,480 --> 00:23:24,720
Speaker 1: Whether you take the southern arc through Nashville or the

436
00:23:24,800 --> 00:23:28,080
Speaker 1: Interstates through Indianapolis. You've got a lot of people they're

437
00:23:28,240 --> 00:23:32,240
Speaker 1: baffled by this president. Is that right? Or am I wrong?

438
00:23:32,359 --> 00:23:36,600
Speaker 1: He's Does he have that much support out there? Well?

439
00:23:36,680 --> 00:23:42,320
Speaker 1: I think everybody uh wants him to succeed. The people

440
00:23:42,400 --> 00:23:45,119
Speaker 1: I talked to of all walks of life want the

441
00:23:45,200 --> 00:23:49,359
Speaker 1: president to succeed, but they're not sure what that means

442
00:23:49,440 --> 00:23:52,080
Speaker 1: to him. I mean, is that something he feels he

443
00:23:52,200 --> 00:23:55,320
Speaker 1: has to do to wom in public policy, not just

444
00:23:55,560 --> 00:24:00,360
Speaker 1: in pr and I think those are important distinctions. Most

445
00:24:00,440 --> 00:24:03,680
Speaker 1: people know he's the only president we've got. We can't

446
00:24:03,840 --> 00:24:06,240
Speaker 1: vote for him or against him for a few more years,

447
00:24:06,640 --> 00:24:09,960
Speaker 1: So why doesn't he win? I mean, let's win some

448
00:24:10,119 --> 00:24:15,640
Speaker 1: of these races, meaning political legislative races. Let's win these

449
00:24:15,720 --> 00:24:19,080
Speaker 1: issues and then move on, and then everybody lives happly

450
00:24:19,119 --> 00:24:22,359
Speaker 1: ever after. People wanting to do well, they're just not

451
00:24:22,480 --> 00:24:24,720
Speaker 1: sure if he will. But frank I mean again, I

452
00:24:24,800 --> 00:24:26,680
Speaker 1: know you take the Keating goulf stream, but if you

453
00:24:26,760 --> 00:24:29,880
Speaker 1: were to take Ice seventy through Michael for the vice

454
00:24:29,960 --> 00:24:34,640
Speaker 1: President's Indiana and if you passed Brazil Indiana, I'm gonna

455
00:24:34,680 --> 00:24:39,000
Speaker 1: make the assumption Brazil is west southwest of Indianapolis. I'm

456
00:24:39,000 --> 00:24:41,600
Speaker 1: gonna make the assumption the good people of Brazil Indiana

457
00:24:42,040 --> 00:24:46,919
Speaker 1: probably went Republican. Those people put you in office. Are

458
00:24:46,960 --> 00:24:49,760
Speaker 1: they still going to vote for this president? Is Frankly,

459
00:24:49,840 --> 00:24:53,960
Speaker 1: some of the polls say yes they will. I think

460
00:24:54,000 --> 00:24:56,480
Speaker 1: most people are only loyal to their wives and half

461
00:24:56,520 --> 00:25:00,239
Speaker 1: of their marriages in the divorce. So now I mean

462
00:25:00,680 --> 00:25:03,880
Speaker 1: there are probably and this is our challenges the as

463
00:25:03,920 --> 00:25:07,240
Speaker 1: the Party of Lincoln an African American community that is

464
00:25:07,359 --> 00:25:11,720
Speaker 1: solidly Democrat, and that disappoints me. But obviously we've got

465
00:25:11,840 --> 00:25:14,560
Speaker 1: to work to open up the opportunity for those folks

466
00:25:14,640 --> 00:25:17,640
Speaker 1: in the convincing to vote Republican. But I think most

467
00:25:17,680 --> 00:25:20,159
Speaker 1: people will vote against Trump just as fast as they

468
00:25:20,280 --> 00:25:24,320
Speaker 1: voted foreign. If you think, did you have an attorney

469
00:25:24,400 --> 00:25:26,160
Speaker 1: general that's going to get you back to the Party

470
00:25:26,200 --> 00:25:32,480
Speaker 1: of Lincoln, well, you know, I the reality is I

471
00:25:33,160 --> 00:25:35,440
Speaker 1: Jeff and I have been friends. Jeff Sessons and I've

472
00:25:35,480 --> 00:25:38,720
Speaker 1: been friends back when we were U S attorneys together,

473
00:25:39,520 --> 00:25:42,760
Speaker 1: And you know, I think that like any of us.

474
00:25:43,280 --> 00:25:45,160
Speaker 1: For example, when I was nominated to beyond the Tenth

475
00:25:45,200 --> 00:25:47,480
Speaker 1: Circuit Court of Appeals, one of the Democrat members of

476
00:25:47,560 --> 00:25:51,360
Speaker 1: the Judiciary Committee in the Congress said, well, I'm very

477
00:25:51,440 --> 00:25:56,119
Speaker 1: concerned about, you know, your issue as to how you

478
00:25:56,280 --> 00:26:00,560
Speaker 1: handle as General Counsel of HUD issues that aginally had

479
00:26:00,680 --> 00:26:03,320
Speaker 1: racial overtones. And I said, I said, sender are you

480
00:26:03,440 --> 00:26:05,680
Speaker 1: where I was State Council of the mule a CP

481
00:26:05,840 --> 00:26:09,320
Speaker 1: in Oklahoma, and then immediately changed the subject because if

482
00:26:09,359 --> 00:26:12,439
Speaker 1: you're a quite male Republican, you're supposed to be a racist,

483
00:26:12,640 --> 00:26:15,640
Speaker 1: which is a complete libel. And I think I think

484
00:26:15,680 --> 00:26:17,680
Speaker 1: that Jeff is a good man, doing the best you camp.

485
00:26:17,880 --> 00:26:20,600
Speaker 1: This has been great. Frank Keating, always inspiring. Thank you

486
00:26:20,720 --> 00:26:23,920
Speaker 1: so much. Always love the conversation with Governor Keating. I've

487
00:26:23,920 --> 00:26:25,720
Speaker 1: got to do, Ah, I've got to do an apology

488
00:26:25,800 --> 00:26:28,639
Speaker 1: to David Guru because I'm a monopolis for conversation. As

489
00:26:29,359 --> 00:26:31,680
Speaker 1: Frank Keating got me going on, we'll have him back.

490
00:26:32,040 --> 00:26:34,280
Speaker 1: Can we book the sixteenth President? Can you try to

491
00:26:34,320 --> 00:26:37,160
Speaker 1: get a Lincoln in your Frank Keating joining us from

492
00:26:37,160 --> 00:26:50,680
Speaker 1: Oklahoma City on our phone lines. What are we gonna retire?

493
00:26:50,720 --> 00:26:53,600
Speaker 1: General Mark kimmittt. He's former Assistant Secretary of State, former

494
00:26:53,600 --> 00:26:55,879
Speaker 1: deputy assistant Secretary of Defense, someone who can give us

495
00:26:55,920 --> 00:26:58,639
Speaker 1: some invaluable perspective here on the war of words, the

496
00:26:58,720 --> 00:27:02,000
Speaker 1: rhetoric that we've heard you're regarding North Korea over these

497
00:27:02,080 --> 00:27:03,840
Speaker 1: last a few days. He joins us from our Note

498
00:27:04,080 --> 00:27:07,280
Speaker 1: one studios in Washington, d C. This morning. Great to

499
00:27:07,359 --> 00:27:08,680
Speaker 1: have you with us here. Let me let me start

500
00:27:08,720 --> 00:27:10,720
Speaker 1: just by asking you to react to what we've heard

501
00:27:11,240 --> 00:27:15,560
Speaker 1: thus far on Twitter, in comments at Bedminster, and through

502
00:27:15,640 --> 00:27:18,920
Speaker 1: Statan's UH from the Korean Peninsula as well. What do

503
00:27:19,000 --> 00:27:21,520
Speaker 1: you make of what we're hearing right now? General, Well,

504
00:27:21,560 --> 00:27:24,200
Speaker 1: two things. First of all, I think the comments that

505
00:27:24,280 --> 00:27:27,280
Speaker 1: came out of the President have been sort of amplified

506
00:27:27,359 --> 00:27:29,760
Speaker 1: down here in Washington, d C. Which is more of

507
00:27:29,840 --> 00:27:33,640
Speaker 1: a function of the political descent between the administration. More

508
00:27:33,720 --> 00:27:37,040
Speaker 1: important is what Secretary Madison Secretary Tillerson had been saying.

509
00:27:37,119 --> 00:27:40,800
Speaker 1: Secretary Tillerson continues to believe that diplomacy is the right

510
00:27:40,880 --> 00:27:44,200
Speaker 1: way to handle this, but Secretary Maddis put out in

511
00:27:44,280 --> 00:27:50,359
Speaker 1: an extraordinarily tough statement yesterday UH in effect threatening the

512
00:27:50,480 --> 00:27:53,760
Speaker 1: North Korean regime that says, if you come after us,

513
00:27:53,960 --> 00:27:58,359
Speaker 1: we will destroy your country and we will destroy your people.

514
00:27:58,760 --> 00:28:01,560
Speaker 1: That's about the toughest writer work I've heard on this situation,

515
00:28:02,200 --> 00:28:05,200
Speaker 1: UM since I can remember. Yeah, I wanted to ask

516
00:28:05,240 --> 00:28:08,200
Speaker 1: you if if the rhetoric and risk are matched up here.

517
00:28:08,600 --> 00:28:11,320
Speaker 1: We listened to Secretary State Rex to Luison asked he

518
00:28:11,400 --> 00:28:15,960
Speaker 1: flew to Guam yesterday. He said Americans should be sleeping sadly, etcetera, etcetera.

519
00:28:16,880 --> 00:28:18,639
Speaker 1: Is the risk as great as the rhetoric would lead

520
00:28:18,760 --> 00:28:21,800
Speaker 1: lead lead one to think. I don't think so. Um.

521
00:28:22,240 --> 00:28:24,520
Speaker 1: The only risk that I'm concerned about is the risk

522
00:28:24,560 --> 00:28:28,440
Speaker 1: of miscalculation that somehow, in this war of words, somebody

523
00:28:28,520 --> 00:28:33,080
Speaker 1: makes mistake, somebody says something uh that is interpreted by

524
00:28:33,080 --> 00:28:36,760
Speaker 1: the other side the wrong way. And what has gone

525
00:28:36,920 --> 00:28:40,840
Speaker 1: then from a rhetorical battle to something a little more significant?

526
00:28:41,520 --> 00:28:44,240
Speaker 1: How much has as as this conversation changed. Of course,

527
00:28:44,280 --> 00:28:46,840
Speaker 1: we've seen now two tests of intercontinental bistic missiles. There's

528
00:28:46,840 --> 00:28:49,280
Speaker 1: the reporting by the Washington Post and others that have

529
00:28:49,360 --> 00:28:52,360
Speaker 1: they've managed to miniaturize a nuclear weapon. How much has

530
00:28:52,440 --> 00:28:56,920
Speaker 1: as the circumstances changed here over these last few years. Well,

531
00:28:58,320 --> 00:29:00,520
Speaker 1: that really is two questions number on how has the

532
00:29:00,560 --> 00:29:04,160
Speaker 1: rhetoric changed. Certainly it's become a lot tougher because I

533
00:29:04,240 --> 00:29:08,320
Speaker 1: think this administration recognizes that they speak softly and carry

534
00:29:08,520 --> 00:29:12,360
Speaker 1: a big stick philosophy which is guided our diplomacy with

535
00:29:12,480 --> 00:29:15,000
Speaker 1: North Korea over the past fifteen years, has done nothing

536
00:29:15,080 --> 00:29:19,000
Speaker 1: to limit or slow down the nuclear development of North Korea.

537
00:29:19,560 --> 00:29:21,880
Speaker 1: So I believe the rhetoric is a little bit tougher.

538
00:29:22,000 --> 00:29:24,400
Speaker 1: In fact, it's considerably tougher. And I think at this

539
00:29:24,560 --> 00:29:28,960
Speaker 1: point that the answer is not only carry a big stick,

540
00:29:29,440 --> 00:29:33,880
Speaker 1: but also talk in the language that this guy understands. Jena, Kimmy,

541
00:29:33,960 --> 00:29:36,840
Speaker 1: you have, as all generals and animals do, a most

542
00:29:36,960 --> 00:29:40,240
Speaker 1: interesting path through your military. There are all sorts of

543
00:29:40,320 --> 00:29:44,800
Speaker 1: wonderful ribbons. The Army Commendation Medal, the Global War on Terrorism,

544
00:29:44,920 --> 00:29:49,560
Speaker 1: expeditionary metal, your service in Germany, your master parachutes wings.

545
00:29:49,840 --> 00:29:52,480
Speaker 1: Do you get a ribbon for having a Chartered Financial

546
00:29:52,560 --> 00:29:56,600
Speaker 1: Analyst designation? Did you get Do I get to wear

547
00:29:56,600 --> 00:29:59,480
Speaker 1: a ribbon because I have that? I mean, what was

548
00:29:59,560 --> 00:30:01,920
Speaker 1: it like in a c f A under the guise

549
00:30:02,000 --> 00:30:07,680
Speaker 1: of military education. Well, it was very interesting. I'd gone

550
00:30:08,080 --> 00:30:10,720
Speaker 1: in that long period of time between captain and major.

551
00:30:10,840 --> 00:30:13,320
Speaker 1: After you've commanded, you have a significant amount of time.

552
00:30:13,360 --> 00:30:16,200
Speaker 1: I went back and taught at West Point. Frankly, my

553
00:30:16,400 --> 00:30:19,240
Speaker 1: alma mater, Harvard Business School, I felt did not have

554
00:30:19,400 --> 00:30:26,560
Speaker 1: a strong finance program. So I actually wanted, oh I know,

555
00:30:26,680 --> 00:30:31,640
Speaker 1: I actually wanted to learn more about the tough part

556
00:30:31,760 --> 00:30:34,280
Speaker 1: of finance, which was going through a revolution in the eighties.

557
00:30:34,320 --> 00:30:37,000
Speaker 1: As you remember, the rocket scientists were coming out. The

558
00:30:37,040 --> 00:30:40,280
Speaker 1: derivatives were now being calculated. You didn't get there at Harvard,

559
00:30:40,960 --> 00:30:43,680
Speaker 1: We didn't that that's tough to the school up the

560
00:30:43,760 --> 00:30:47,440
Speaker 1: Charles River that maybe could along the way. No, that's

561
00:30:47,440 --> 00:30:51,480
Speaker 1: exactly right. M I T and Sloan really got hard

562
00:30:51,560 --> 00:30:56,440
Speaker 1: on that, as did Wharton at Carnegie Mellon and exactly

563
00:30:57,040 --> 00:30:59,440
Speaker 1: and and being an engineer by background from West Point,

564
00:30:59,480 --> 00:31:02,120
Speaker 1: I really wanted to learn the math, and God bless

565
00:31:02,160 --> 00:31:04,720
Speaker 1: my holma mater, but that was general management, and I

566
00:31:04,840 --> 00:31:06,880
Speaker 1: was teaching finance, and I just felt it was important

567
00:31:06,880 --> 00:31:11,040
Speaker 1: to know much more than my students. Well, Mark, Tracy, Patrick, Kimmit,

568
00:31:11,200 --> 00:31:13,760
Speaker 1: Kommas c f A. Let me. I'm gonna get to

569
00:31:13,840 --> 00:31:18,080
Speaker 1: the gossip. I can't think of anyone more qualified to

570
00:31:18,200 --> 00:31:20,760
Speaker 1: pick up the pieces of the White House press room

571
00:31:21,400 --> 00:31:24,480
Speaker 1: than you. We have a president who has an affinity

572
00:31:24,680 --> 00:31:28,840
Speaker 1: for people with eagles and stars on their shoulders. We've

573
00:31:28,880 --> 00:31:32,880
Speaker 1: had a Donnie Brook. Whatever anybody's politics within the press room,

574
00:31:33,200 --> 00:31:36,840
Speaker 1: have you been contacted by General Kelly to take over

575
00:31:36,960 --> 00:31:41,160
Speaker 1: the things you are experienced at, which is communicating with

576
00:31:41,320 --> 00:31:44,120
Speaker 1: the press in the public, Well, I haven't, And I've

577
00:31:44,120 --> 00:31:46,920
Speaker 1: got the greatest respect for John Kelly. I've served side

578
00:31:46,960 --> 00:31:49,640
Speaker 1: by side with him before, but I think you said

579
00:31:49,640 --> 00:31:51,080
Speaker 1: that there are a lot of generals there. I spent

580
00:31:51,160 --> 00:31:55,000
Speaker 1: a year as the spokesman in Iraq, and uh, that's

581
00:31:55,080 --> 00:31:59,800
Speaker 1: enough for me see that cold silence days. Why don't

582
00:31:59,800 --> 00:32:03,760
Speaker 1: you after I just destroyed the conversation, I want to

583
00:32:04,160 --> 00:32:07,000
Speaker 1: get your sense of of how cohesive you think that

584
00:32:07,040 --> 00:32:09,360
Speaker 1: the national security team is within the White House. Now,

585
00:32:09,400 --> 00:32:11,320
Speaker 1: there was all of the palace intrigue at the beginning

586
00:32:11,400 --> 00:32:13,600
Speaker 1: about some people want to go one direction, others wanting

587
00:32:13,640 --> 00:32:16,760
Speaker 1: to go another. Tom mentioned some of the principles involved

588
00:32:16,800 --> 00:32:19,080
Speaker 1: in all this. Do you feel like it's it's cohering,

589
00:32:19,120 --> 00:32:21,520
Speaker 1: it's working as a team today, Well, I think we're

590
00:32:21,520 --> 00:32:26,240
Speaker 1: going to go through another round of departures. John Kelly

591
00:32:26,280 --> 00:32:28,440
Speaker 1: again is enormously talented. He knows how to be a

592
00:32:28,520 --> 00:32:33,200
Speaker 1: chief of staff. He doesn't brook gossip, he doesn't brook leaks.

593
00:32:33,480 --> 00:32:35,480
Speaker 1: Some people I think are going to try to testament

594
00:32:35,600 --> 00:32:38,560
Speaker 1: and they'll probably find themselves on the other side of

595
00:32:38,600 --> 00:32:41,800
Speaker 1: the street. Um on the issue of national security, I

596
00:32:41,880 --> 00:32:45,440
Speaker 1: think is more important. We probably have the most talented,

597
00:32:46,160 --> 00:32:50,520
Speaker 1: experienced group of national security professionals handling this crisis right now.

598
00:32:51,080 --> 00:32:55,280
Speaker 1: And I don't mean Ivory Tower intellectuals. I don't mean

599
00:32:55,760 --> 00:33:00,840
Speaker 1: cruise missile liberals. I mean people that understand not only war,

600
00:33:01,000 --> 00:33:04,600
Speaker 1: but understand the cost of war. In that that significant

601
00:33:04,640 --> 00:33:10,600
Speaker 1: group before Maddis Dunford at the Pentagon, Kelly McMaster at

602
00:33:11,000 --> 00:33:13,160
Speaker 1: the White House. Those are the people I want helping

603
00:33:13,720 --> 00:33:17,200
Speaker 1: to make the decisions because they're sober minded enough to

604
00:33:17,320 --> 00:33:19,920
Speaker 1: know what the real costs are of going to war

605
00:33:20,000 --> 00:33:22,360
Speaker 1: in Korea. For goodness sakes, and God bless him, John

606
00:33:22,440 --> 00:33:26,120
Speaker 1: Kelly lost his son in Iraq. These are experienced professionals

607
00:33:26,600 --> 00:33:29,680
Speaker 1: that don't look at war as a theoretical construct. They

608
00:33:29,960 --> 00:33:32,719
Speaker 1: have fought it, they know the cost of it, they

609
00:33:32,760 --> 00:33:35,200
Speaker 1: know how to fight it if necessary. So I think

610
00:33:35,280 --> 00:33:37,720
Speaker 1: the President has the opportunity to get the best advice

611
00:33:37,800 --> 00:33:39,840
Speaker 1: in the world on this issue. With regards to Korea.

612
00:33:40,000 --> 00:33:42,360
Speaker 1: I know that you worked on plans and strategy at

613
00:33:42,400 --> 00:33:44,600
Speaker 1: sent Com and and there's a lot of conversation here

614
00:33:44,640 --> 00:33:47,880
Speaker 1: about how we resolve this crisis on the Korean peninsula diplomatically,

615
00:33:47,920 --> 00:33:50,320
Speaker 1: get folks back to the negotiating the table, but help

616
00:33:50,400 --> 00:33:53,280
Speaker 1: us understands militarily how this might be playing out behind

617
00:33:53,320 --> 00:33:55,480
Speaker 1: the scenes. That We've seen the rhetoric on Twitter about

618
00:33:55,760 --> 00:33:58,680
Speaker 1: how equipped, how capable that the the US forces are

619
00:33:58,960 --> 00:34:01,120
Speaker 1: in terms of military traategy. Where do things stand? Do

620
00:34:01,160 --> 00:34:03,800
Speaker 1: you think? Well, first of all, I think everybody needs

621
00:34:03,840 --> 00:34:05,920
Speaker 1: to start breathing through their mouths and their noses and

622
00:34:06,040 --> 00:34:09,520
Speaker 1: just relax a bit and understand the center of gravity

623
00:34:09,640 --> 00:34:13,920
Speaker 1: of this fight is Kim Jong il's desire, Kim Jong

624
00:34:14,040 --> 00:34:18,960
Speaker 1: UN's desire to maintain and perpetuate his regime. He may

625
00:34:19,080 --> 00:34:23,160
Speaker 1: be a little bit crazy, but he's not suicidal. So

626
00:34:23,600 --> 00:34:27,840
Speaker 1: in my mind, we have got to recognize that what

627
00:34:28,760 --> 00:34:30,640
Speaker 1: all of this acting out on this part and all

628
00:34:30,680 --> 00:34:33,560
Speaker 1: this nuclear development is for one reason alone, and that's

629
00:34:33,600 --> 00:34:36,640
Speaker 1: to keep the Chinese out and keep the Koreans, the

630
00:34:36,719 --> 00:34:40,279
Speaker 1: South Koreans, and the Americans out. So if you start

631
00:34:40,320 --> 00:34:43,080
Speaker 1: from that premise, you realize that you've got to meet

632
00:34:43,200 --> 00:34:47,839
Speaker 1: him not only capability for capability, but also word for word,

633
00:34:48,080 --> 00:34:50,640
Speaker 1: and hopefully that will put him back into a position

634
00:34:50,680 --> 00:34:55,719
Speaker 1: where he is no longer a threat uh to the region. Uh.

635
00:34:56,200 --> 00:34:57,799
Speaker 1: Do you do you think that that's likely? I mean

636
00:34:57,880 --> 00:34:59,800
Speaker 1: that the principles of all changing, We've got a new present,

637
00:34:59,840 --> 00:35:01,600
Speaker 1: there's a new leader in South Korea of course a

638
00:35:01,640 --> 00:35:04,040
Speaker 1: new leader in North Korea as well. Are you optimistic

639
00:35:04,080 --> 00:35:06,520
Speaker 1: that we can get back to the negotiating table. Well, well,

640
00:35:06,560 --> 00:35:08,520
Speaker 1: I am, but I think we've got to understand we're

641
00:35:08,560 --> 00:35:11,720
Speaker 1: taking a different negotiating tone. I mean, the fact remains

642
00:35:12,239 --> 00:35:14,520
Speaker 1: this speak softly and carry a big stick has done

643
00:35:14,600 --> 00:35:18,400
Speaker 1: nothing for the last fifteen twenty years to halt his development.

644
00:35:18,440 --> 00:35:22,560
Speaker 1: He's violated every agreement that he's ever UM signed up to,

645
00:35:23,360 --> 00:35:26,600
Speaker 1: and frankly, I think we just have to take a

646
00:35:26,680 --> 00:35:28,800
Speaker 1: different tack. I think it's important to recognize that this

647
00:35:28,920 --> 00:35:32,440
Speaker 1: rhetoric of the president was not simply meant for North Korea,

648
00:35:32,800 --> 00:35:35,719
Speaker 1: it was also meant for China as well. And the

649
00:35:35,800 --> 00:35:38,240
Speaker 1: message is clear and simple. You want me to handle

650
00:35:38,320 --> 00:35:40,480
Speaker 1: this or do you guys want to handle it? General,

651
00:35:40,600 --> 00:35:43,360
Speaker 1: thank you so much, Mark Kim and General kivin with

652
00:35:43,560 --> 00:35:49,120
Speaker 1: us today. We greatly appreciate from our studios studios in Washington.

653
00:36:01,280 --> 00:36:04,800
Speaker 1: This is always a joy. He is the most interesting

654
00:36:04,960 --> 00:36:07,800
Speaker 1: pedigreed to wander his way to the White House and

655
00:36:08,160 --> 00:36:11,800
Speaker 1: within that out to boost school in Chicago through Milton Academy,

656
00:36:12,840 --> 00:36:16,680
Speaker 1: through UM. Thank he did, okay, and then on on

657
00:36:16,840 --> 00:36:19,880
Speaker 1: the m I t as well. Austin Gelsi joins us

658
00:36:19,920 --> 00:36:22,680
Speaker 1: now on our phone line, Austin, wonderful to talk to you.

659
00:36:22,880 --> 00:36:26,719
Speaker 1: Our our theme here today has been our labor economy.

660
00:36:26,880 --> 00:36:31,680
Speaker 1: You've lived this and particularly with your council to President Obama,

661
00:36:32,239 --> 00:36:36,600
Speaker 1: there is an individual streak across all of America where

662
00:36:36,640 --> 00:36:40,920
Speaker 1: the individuals we do it alone, lazy, freer, free market.

663
00:36:41,000 --> 00:36:44,560
Speaker 1: We don't need institutions to help us. Where do we

664
00:36:44,719 --> 00:36:49,879
Speaker 1: stand on that in two thousand seventeen, Well for having

665
00:36:49,960 --> 00:36:53,759
Speaker 1: me back, I saw you ment. I've wandered through the

666
00:36:53,880 --> 00:36:57,319
Speaker 1: labor because I got a job and uh, and then

667
00:36:57,400 --> 00:37:00,920
Speaker 1: I had to come back and refine that job when

668
00:37:00,960 --> 00:37:04,720
Speaker 1: I got out of Washington. Uh. You know, I think

669
00:37:04,920 --> 00:37:12,080
Speaker 1: that we still have a major cultural push toward that

670
00:37:12,440 --> 00:37:20,120
Speaker 1: individualism and the rise of the gig economy and working

671
00:37:20,480 --> 00:37:25,359
Speaker 1: part time, filling in scratches at it's a little bit.

672
00:37:25,560 --> 00:37:28,320
Speaker 1: I think that's why there's there's more taste for the

673
00:37:29,000 --> 00:37:33,840
Speaker 1: for the rise of the gig economy among workers maybe

674
00:37:33,960 --> 00:37:38,960
Speaker 1: than than among the press, let's call it. But as

675
00:37:39,080 --> 00:37:43,000
Speaker 1: you know, the economy has moved a little more to

676
00:37:43,160 --> 00:37:47,080
Speaker 1: teams and teams teams and joint work are are a

677
00:37:47,239 --> 00:37:51,680
Speaker 1: bigger they're bigger factor in the economy now than uh,

678
00:37:52,480 --> 00:37:56,480
Speaker 1: certainly than they have been in recent times. Maybe if ever,

679
00:37:57,160 --> 00:37:59,560
Speaker 1: and we've had a little bit of devin to adjust

680
00:37:59,640 --> 00:38:02,480
Speaker 1: to that. I had some time to adjust to that.

681
00:38:02,480 --> 00:38:04,520
Speaker 1: I wonder if'gotten any better at measuring it. We talked

682
00:38:04,520 --> 00:38:06,600
Speaker 1: to Alan Krueger from time to time on the show

683
00:38:06,640 --> 00:38:09,440
Speaker 1: your former colleague about his work on the gig economy.

684
00:38:09,480 --> 00:38:12,000
Speaker 1: How how much better are we at measuring the effects

685
00:38:12,040 --> 00:38:14,560
Speaker 1: on the labor economy of part time work of these

686
00:38:14,600 --> 00:38:18,480
Speaker 1: new gigs. Yes, and we're not great about measuring it,

687
00:38:18,960 --> 00:38:24,479
Speaker 1: partly because the people themselves working those gigs don't think

688
00:38:24,560 --> 00:38:28,400
Speaker 1: of them as regular jobs. The elective and so then

689
00:38:28,760 --> 00:38:33,200
Speaker 1: the current population survey, which is the big survey where

690
00:38:33,239 --> 00:38:38,160
Speaker 1: we get the unemployment rate every month. They've gone back

691
00:38:38,239 --> 00:38:42,920
Speaker 1: and looked at the administrative records, and Alan Krueger and

692
00:38:43,040 --> 00:38:47,680
Speaker 1: others owned them. Specifically, their own research shows I think

693
00:38:47,719 --> 00:38:49,719
Speaker 1: a quarter or a third of the people who are

694
00:38:49,800 --> 00:38:52,120
Speaker 1: working those gig jobs that when they're asked do you

695
00:38:52,280 --> 00:38:54,960
Speaker 1: have do you have a job? They don't count those

696
00:38:55,040 --> 00:38:58,320
Speaker 1: as their jobs. So so our measurement is not perfect.

697
00:39:00,040 --> 00:39:02,399
Speaker 1: Scares a little bit here where we've got to both

698
00:39:02,520 --> 00:39:04,880
Speaker 1: both Houses a Congress on recess. Right now, the President

699
00:39:04,960 --> 00:39:07,799
Speaker 1: up in Bedminster, Uh, enjoying so much as you can

700
00:39:07,880 --> 00:39:10,320
Speaker 1: a seventeen day working vacation. They're gonna come back and

701
00:39:10,400 --> 00:39:12,040
Speaker 1: have to deal with the dead ceiling. And you've been

702
00:39:12,560 --> 00:39:14,800
Speaker 1: in the White House as all of this unfolded, the

703
00:39:15,520 --> 00:39:18,040
Speaker 1: now regular debate over how to raise it, when to

704
00:39:18,120 --> 00:39:20,919
Speaker 1: raise it, if to do it cleanly or otherwise. What's

705
00:39:20,960 --> 00:39:24,040
Speaker 1: your counsel to this new administration about how to go

706
00:39:24,120 --> 00:39:26,040
Speaker 1: about this, how to speak with a unified voice on

707
00:39:26,120 --> 00:39:31,640
Speaker 1: that issue in particular. Look, the thing is, we have

708
00:39:31,960 --> 00:39:35,560
Speaker 1: never been in the circumstance that we're about to be in.

709
00:39:36,320 --> 00:39:41,160
Speaker 1: And by that I mean there there have a few

710
00:39:41,360 --> 00:39:46,839
Speaker 1: times been fights over the dead ceiling, but never when

711
00:39:46,960 --> 00:39:50,400
Speaker 1: the party of the president and both houses of Congress

712
00:39:50,440 --> 00:39:54,680
Speaker 1: are the same. Because normally they're on the same page

713
00:39:55,000 --> 00:39:58,080
Speaker 1: and they can pass a budget. They what they look,

714
00:39:58,160 --> 00:40:01,560
Speaker 1: They see that the dead ceil. Fighting over the dead

715
00:40:01,640 --> 00:40:07,000
Speaker 1: ceiling doesn't really make any logical sense. Congress itself has

716
00:40:07,120 --> 00:40:10,560
Speaker 1: already passed the laws that they're then trying to say, no,

717
00:40:10,760 --> 00:40:14,560
Speaker 1: we won't pay the bills for these laws. So normally,

718
00:40:15,560 --> 00:40:18,480
Speaker 1: if they're all the same party, they just quietly passed

719
00:40:18,520 --> 00:40:20,880
Speaker 1: an increase in the dead ceiling, and they attached it

720
00:40:21,000 --> 00:40:24,600
Speaker 1: to a build that's building a bridge of something. Then

721
00:40:24,680 --> 00:40:26,800
Speaker 1: this let no one ever speak of it again and

722
00:40:26,920 --> 00:40:31,120
Speaker 1: they move on. And so I thought that's what they

723
00:40:31,160 --> 00:40:34,280
Speaker 1: would do. And I guess my advice to the president

724
00:40:34,440 --> 00:40:39,759
Speaker 1: would be would have been just go talk to Mitch

725
00:40:39,880 --> 00:40:42,520
Speaker 1: McConnell behind the scenes and be quiet about it and

726
00:40:42,920 --> 00:40:47,160
Speaker 1: just get it done. Uh. I guess I don't understand

727
00:40:47,440 --> 00:40:52,680
Speaker 1: the logic that while you're on vacation you would come

728
00:40:52,760 --> 00:40:55,400
Speaker 1: in and just do a little bit of Twitter and

729
00:40:55,480 --> 00:40:58,920
Speaker 1: attack Mitch McConnell and say that he's a hypocrite and

730
00:40:58,960 --> 00:41:03,520
Speaker 1: can't get his job done. And um, because now when

731
00:41:03,600 --> 00:41:05,600
Speaker 1: they come back, you need him. You need him to

732
00:41:05,719 --> 00:41:09,400
Speaker 1: quietly go change the change the rules and raise the

733
00:41:09,480 --> 00:41:12,320
Speaker 1: dead sailing. Austin goes a minute here, and then we

734
00:41:12,360 --> 00:41:14,440
Speaker 1: want to come back and dive into other themes. How

735
00:41:14,520 --> 00:41:16,640
Speaker 1: critical is it for Kevin Hassett to dark at the

736
00:41:16,680 --> 00:41:20,560
Speaker 1: door at the White House? I mean, this process is Look,

737
00:41:20,640 --> 00:41:23,040
Speaker 1: you and I are friends with Kevin, and I disagree

738
00:41:23,080 --> 00:41:28,080
Speaker 1: with Kevin on a politics, but he's a reasonable guy.

739
00:41:28,800 --> 00:41:33,000
Speaker 1: He's sensible, you know. I think the bigger issue will

740
00:41:33,080 --> 00:41:36,319
Speaker 1: be that they should pass him. They should put him

741
00:41:36,320 --> 00:41:39,640
Speaker 1: in the White House. Boy, did the president should start

742
00:41:39,719 --> 00:41:43,399
Speaker 1: listening to him? Um, I don't know that that he's

743
00:41:43,440 --> 00:41:46,120
Speaker 1: going to but you know we we can all keep

744
00:41:46,160 --> 00:41:49,719
Speaker 1: our fingers in Austin. Now we go in August where

745
00:41:49,840 --> 00:41:56,560
Speaker 1: parents dare to tread. We consider your pedigree. Milton Academy

746
00:41:56,680 --> 00:41:59,879
Speaker 1: dare to be true a member of the debate team,

747
00:42:00,200 --> 00:42:04,320
Speaker 1: the Massachusetts Forensic League, the National Forensic League, the Catholic

748
00:42:04,400 --> 00:42:09,280
Speaker 1: Forensic League, and the Debate Association of New England Independent Schools.

749
00:42:09,760 --> 00:42:12,680
Speaker 1: This is the time of year Austin where parents lean

750
00:42:12,760 --> 00:42:15,440
Speaker 1: across the table and say to their children, you know,

751
00:42:15,520 --> 00:42:18,880
Speaker 1: you really ought to join the debate team. Help us

752
00:42:18,960 --> 00:42:21,640
Speaker 1: with this, Austin. What was the first state like at

753
00:42:21,719 --> 00:42:25,920
Speaker 1: Milton Academy when young Gulsby walked in and what's going

754
00:42:26,000 --> 00:42:32,719
Speaker 1: to debate? How scared were you? Well? I did? Uh?

755
00:42:33,360 --> 00:42:37,560
Speaker 1: I mostly in high school did speech events, uh, rather

756
00:42:37,600 --> 00:42:40,880
Speaker 1: than debate events. It was still nerve racking because you

757
00:42:40,960 --> 00:42:43,800
Speaker 1: gotta you gotta memorize the speech. They gave you a

758
00:42:43,880 --> 00:42:46,920
Speaker 1: thirty minutes, they gave you a topic and you had

759
00:42:46,960 --> 00:42:53,440
Speaker 1: to write and memorize the thing speaking. But you know

760
00:42:53,680 --> 00:42:57,880
Speaker 1: the thing is, boy, I'm glad I signed up. I

761
00:42:58,000 --> 00:43:00,080
Speaker 1: can't even remember how I ended up in that, but

762
00:43:00,600 --> 00:43:04,440
Speaker 1: but it ended up being good for life, you know,

763
00:43:04,840 --> 00:43:10,160
Speaker 1: just being able to express yourself in a way that's clear,

764
00:43:10,280 --> 00:43:14,719
Speaker 1: making argument. The society never gets tired of that. Well,

765
00:43:15,040 --> 00:43:17,960
Speaker 1: and then you took a step to the artificial intelligence

766
00:43:18,000 --> 00:43:20,880
Speaker 1: and the robots they still haven't figured out how to replace.

767
00:43:21,040 --> 00:43:23,400
Speaker 1: Then Austin, you took a step down academically. You went

768
00:43:23,440 --> 00:43:27,319
Speaker 1: from Milton Academy to a small school in New Haven, Connecticut.

769
00:43:27,719 --> 00:43:29,800
Speaker 1: So you go to Yale and you're doing the debate

770
00:43:29,880 --> 00:43:32,720
Speaker 1: thing and that How does being on the debate team

771
00:43:33,360 --> 00:43:36,759
Speaker 1: line up your brain? What? What is the process when

772
00:43:36,800 --> 00:43:41,239
Speaker 1: you're a kid where that debate or speech experience helps

773
00:43:41,280 --> 00:43:44,320
Speaker 1: you line up things in your head? Well, you're getting

774
00:43:44,760 --> 00:43:47,960
Speaker 1: you're getting deep on me, Tom, Well you're the chance

775
00:43:48,040 --> 00:43:49,719
Speaker 1: that one look you come on, you wan the whole

776
00:43:49,760 --> 00:43:54,239
Speaker 1: thing organized. You gotta be organized, you gotta be logical. Uh.

777
00:43:55,160 --> 00:44:00,520
Speaker 1: It turns out that one of my main iv ols

778
00:44:01,200 --> 00:44:05,960
Speaker 1: uh in debate when I was in college, that we

779
00:44:06,320 --> 00:44:09,799
Speaker 1: would beat regularly, I might add, was none other than

780
00:44:10,000 --> 00:44:14,160
Speaker 1: Ted Cruz. This editor from Texas and uh so I

781
00:44:14,280 --> 00:44:16,960
Speaker 1: got a lot of funny stories about him. So you know,

782
00:44:17,360 --> 00:44:21,680
Speaker 1: part of part of any event like debate, I think

783
00:44:22,719 --> 00:44:27,840
Speaker 1: is getting your mind ready logical and organized, but parts

784
00:44:27,880 --> 00:44:30,000
Speaker 1: also the people you work with. You know you're working.

785
00:44:30,000 --> 00:44:31,600
Speaker 1: You spent a lot of time working on that. But

786
00:44:31,840 --> 00:44:34,600
Speaker 1: you know, high school, I probably spent more time working

787
00:44:34,680 --> 00:44:37,560
Speaker 1: on the speech and debate stuff than all my classes.

788
00:44:38,200 --> 00:44:41,080
Speaker 1: Uh and you know, I don't know if if I

789
00:44:41,200 --> 00:44:43,640
Speaker 1: probably should have been doing my homework more. But yeah,

790
00:44:43,640 --> 00:44:45,840
Speaker 1: I know you slept off. Would you stop at Austin?

791
00:44:45,920 --> 00:44:48,239
Speaker 1: You're killing me? He went on. Folks to the m

792
00:44:48,320 --> 00:44:50,239
Speaker 1: I t or Stan Fisher said, yeah, we'll give you

793
00:44:50,239 --> 00:44:53,000
Speaker 1: a PhD. Okay, why not David here into the lecture

794
00:44:53,280 --> 00:44:56,319
Speaker 1: on critical thinking skills in August? Why don't you bring

795
00:44:56,440 --> 00:44:59,759
Speaker 1: us back to something more useful Austin. You you came

796
00:44:59,800 --> 00:45:02,640
Speaker 1: in a government after a career in academia. We've got

797
00:45:02,840 --> 00:45:04,759
Speaker 1: folks in this administration now, a lot of whom have

798
00:45:04,880 --> 00:45:07,680
Speaker 1: not served in government before. What did you learn about

799
00:45:08,200 --> 00:45:12,360
Speaker 1: that relationship between the executive branch and the legislative branch?

800
00:45:12,400 --> 00:45:15,840
Speaker 1: About working with Congress? How how hard was it to

801
00:45:15,960 --> 00:45:19,600
Speaker 1: learn your way down Pennsylvania Avenue up to the Capitol. Well,

802
00:45:19,840 --> 00:45:24,360
Speaker 1: you know, they usually wouldn't release me without an escort,

803
00:45:24,600 --> 00:45:27,600
Speaker 1: you know, over a tigress. But that that's okay. Um.

804
00:45:28,680 --> 00:45:33,759
Speaker 1: I think presidents can take different approaches and the uh

805
00:45:34,120 --> 00:45:39,960
Speaker 1: toward Congress. Some like President Obama are very policy oriented

806
00:45:40,440 --> 00:45:43,360
Speaker 1: and they come up with a lot of specific ideas

807
00:45:43,440 --> 00:45:46,200
Speaker 1: that they have allies and Congress and they say, look,

808
00:45:46,239 --> 00:45:49,480
Speaker 1: here's the president's plan for a B and C. Others

809
00:45:50,200 --> 00:45:53,560
Speaker 1: have followed a model that I thought Donald Trump was following,

810
00:45:53,719 --> 00:45:58,279
Speaker 1: which is the White House itself doesn't really have any

811
00:45:58,520 --> 00:46:01,839
Speaker 1: details or doesn't have that that many and so they

812
00:46:01,880 --> 00:46:06,640
Speaker 1: would be more reflecting what Kyras. Kyras would put up

813
00:46:06,680 --> 00:46:09,880
Speaker 1: the details and they would they would sign bills or

814
00:46:10,280 --> 00:46:15,120
Speaker 1: or you know, focus more on management. Um, I was

815
00:46:15,160 --> 00:46:18,759
Speaker 1: wrong about that. They haven't managed the White House very

816
00:46:18,840 --> 00:46:23,920
Speaker 1: well and they haven't put forward policy. And I guess

817
00:46:24,080 --> 00:46:28,880
Speaker 1: my summary is I don't think that the White House

818
00:46:29,040 --> 00:46:33,680
Speaker 1: realizes that most everything that you're gonna be able to

819
00:46:33,880 --> 00:46:38,560
Speaker 1: do happens in a pretty short window right at the beginning,

820
00:46:39,200 --> 00:46:42,600
Speaker 1: and then as you get to the first midderm, I

821
00:46:42,880 --> 00:46:46,000
Speaker 1: think they're gonna find the same thing Barack Obama found

822
00:46:46,280 --> 00:46:49,840
Speaker 1: and George Bush before that, and others before that. You

823
00:46:49,960 --> 00:46:52,560
Speaker 1: come to the election and the president will say, hey,

824
00:46:53,600 --> 00:46:56,400
Speaker 1: why don't I come down and help your campaign? And

825
00:46:56,600 --> 00:46:59,000
Speaker 1: then the people in starts saying, oh, no, you know what,

826
00:46:59,440 --> 00:47:01,839
Speaker 1: we know are really busy. Why don't you not come

827
00:47:01,920 --> 00:47:04,440
Speaker 1: down here? Why don't you in fact, don't tell anyone

828
00:47:04,560 --> 00:47:08,319
Speaker 1: you know me and don't save my name because they

829
00:47:08,440 --> 00:47:11,960
Speaker 1: all read the polls the same as we do. And

830
00:47:13,520 --> 00:47:16,080
Speaker 1: after the first year, I think it's hard to do anything.

831
00:47:16,440 --> 00:47:19,200
Speaker 1: And I don't think the White House. Yeah, I don't

832
00:47:19,200 --> 00:47:21,960
Speaker 1: think that White House has factored that in fully. Austin

833
00:47:21,960 --> 00:47:24,279
Speaker 1: Austin who goes we know debate. We enjoy having you

834
00:47:24,400 --> 00:47:27,120
Speaker 1: with us. He is from the Bush School in Chicago.

835
00:47:27,160 --> 00:47:30,080
Speaker 1: Austin goesby, thank you so much, this wanting. He's a

836
00:47:30,160 --> 00:47:42,680
Speaker 1: former chairman of the President's Council of Economic Advisers. Thanks

837
00:47:42,760 --> 00:47:46,879
Speaker 1: for listening to the Bloomberg Savannas podcast. Subscribe and listen

838
00:47:46,920 --> 00:47:52,560
Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

839
00:47:52,640 --> 00:47:55,960
Speaker 1: you prefer. I'm on Twitter at Tom Keene. David Gura

840
00:47:56,520 --> 00:48:00,280
Speaker 1: is that David Gura? Before the podcast? You can always

841
00:48:00,320 --> 00:48:02,960
Speaker 1: catch us worldwide. I'm Bloomberg Radio